India Inc’s revenue growth in the third quarter ended December 2014 will fall to 7% (year-on-year) due to slow pace of investment, subdued growth in export-oriented sectors and soft commodity prices, according to CRISIL Research.
CRISIL Research, in its preview Q3 of FY2015, said on the profitability front, it foresees a marginal uptick in EBITDA margins.CRISIL The aggregate margins could improve by 25-50 basis points in the reporting quarter
Revenue growth was around 9% in the preceding quarter (Q2 ended September 2014) and 13% in the December 2013 quarter. Prasad Koparkar, Senior Director, CRISIL Research, “Investment driven sectors will drag down growth. For example, volume growth for top 15 cement companies, accounting for 55% of industry volumes, will decelerate to 5% in Q3 from 9% in the first half of the year.
Capital goods manufacturers, continuing to grapple with weak order inflows, are likely to report a nine% drop in revenues. The construction companies will report a slight uptick in topline growth. Yet growth of this sector will still lag aggregate corporate India revenue growth, it said.
IT service providers are expected to report 10-11% revenue growth y-o-y (in dollar terms) in Q3, similar to the growth recorded in each of the preceding six quarters. However, due to lack of currency tailwinds, rupee revenue growth will be far lower than in 2013-14.
Ajay Srinivasan, Director, CRISIL Research, said, automobiles, cement, roads, and telecom segments may outperform. Margins may rise 70 bps in automobiles, propelled by commercial and passenger vehicle segments, while margins of component companies could expand by around 120 bps due to higher utiilisation levels and lower input costs.
EBITDA margins of road developers are likely to jump 350-450 bps due to a rise in operational BOT (build operate transfer) projects, while surging data revenues and control over marketing costs will lift telecom operators’ margins by 140 bps.
On the other hand, despite softer crude oil prices, profitability gains could be limited for companies with raw materials linked to the crude chain, due to losses booked on inventory previously procured. Central power utilities, coal, IT, complex fertiliser and paper companies are expected to report lower margins, it said.